Article No. 84

Customer Psychology Findings, by James Larsen, Ph.D.

Marketplace Injustice

Have you ever been beaten to death with brand loyalty?
That's what happens when you develop a superior product or
service and challenge an established brand. People prefer
the familiar brand and your improvement is a marketplace
failure.

Where's the justice?

This phenomenon is called the
status quo bias
and it's the reason niche marketing is so popular: there are
no established brands to challenge, and you can make the bias
work for you by getting into the niche market first.

A.V. Muthukrishnan, a professor at Hong Kong University,
recently completed research exploring the
status quo bias.
He was curious to learn how it works and how to influence it.
He learned that overconfidence is the driving force behind it
and he demonstrated ways to both strengthen and weaken it.

Muthukrishnan conducted a series of 2-day experiments with
young women using hand cream as the product. In all the
experiments the women chose a brand they felt was best on the
first day and then returned 2 days later and made the
selection once again. However, this second time a new brand
was added, one superior to all the others.

In Muthukrishnan's first experiment, some women tried
their chosen hand cream only once. And when they returned 2
days later and were offered the new brand, 86% of them chose
it. The rest of the women in the experiment tried their
chosen brand 6 times in a row, wiping off excess hand cream
between trials. When they returned 2 days later and faced an
identical choice, only 27% of them chose the new, superior
brand. Muthukrishnan demonstrated that multiple trials, even
when they're contrived and silly, stimulate the
status quo bias.

In another experiment he asked some women to rate their
beliefs about 8 specific benefits of using their chosen hand
cream, everything from "softens skin" to "prevents wrinkles."
When these women returned 2 days later, 68% chose the same
brand once again, even though it was clearly inferior; while
86% of women who did not complete this exercise selected the
new, superior brand. So merely thinking about product
benefits also strengthens the bias. When he combined the added trials and the benefit-rating
exercise, 82% of the women chose the inferior brand on the
second day. These two marketing devices greatly strengthen
the
status quo bias.

The most popular marketing device used to challenge an
established brand is the free trial, so Muthukrishnan tried
it and found that it works; 61% of the women trying the
superior, challenge brand on the second day selected it. But
he did discover a drawback, women who tried the challenge
brand yet chose the original brand were even more convinced
of its superiority, even though it was clearly inferior.

Muthukrishnan analyzed all his data searching for the
psychological processes driving the bias and learned an
important rule: Anything that hinders a comparison of
product features strengthens the
status quo bias,
and favors established brands. Conversely, anything that
facilitates such comparisons weakens the bias and favors
superior, challenge brands. For example, offering samples of
a new brand of sausage at the market will more effectively
weaken the bias if you include samples of established brands
in the trial. Consumers can taste both and be relieved of
having to compare the taste of a fresh sausage with a memory
of a sausage eaten days or weeks earlier.

A new car dealer may greet a customer with
"Have you ever owned this brand of car before?"
and follow up an affirmative answer by inquiring about
product benefits he/she experienced, like feeling prosperous
driving this brand of new car. Customers will overlook the
fact that an identical benefit will follow any new car they
purchase, and their
status quo bias
will be strengthened. They'll buy the same brand again.
This car dealer would also be wise to side step an offer to
compare product specifications with clearly superior brands
by pointing out unique product features, ones that can't be
compared. Chrysler used this technique when they first
introduced air bags.